The dollar slipped following the mix if data, where jobless claims were lower, housing starts fell, and the Philly Fed index missed expectations. The 41k initial claims drop to a 45-year low of 220k in the BLS survey week reversed the 11k rise to 261k in the week of both New Year’s and the “bomb cyclone” that included a 27k spike in NSA claims in New York. Today’s 220k figure was the lowest since the 218k reading in February of 1973, versus a prior cycle-low of 223k in mid-October. U.S. housing starts dropped 8.2% to 1.192 mln in December following the 3.0% November increase to 1.299 mln, while Building permits dipped 0.1% to 1.302 mln following a revised 1.0% decline to 1.303 mln (was 1.298 mln). Nevertheless, U.S. Philly Fed’s manufacturing index fell 5.7 points to 22.2 in January, a little weaker than expected though still at a health level. The index bounced 3.6 points to 27.9 in December (revised from 26.2) after tumbling 4.5 points to 24.3 in November (revised from 22.7). The index was 24.1 a year ago.
USDJPY dipped to 111.13 from near 111.25, as EURUSD topped 1.2240 from 1.2230, on the data release. USDJPY after lifted to a four-session high of 111.48 in Tokyo today, it retraced within the day , back to low 111.00 levels. The USDJPY support is initially around the 110.80-110.90 zone (50% Fibonacci level since yesterday’s low, PP from the Daily Chart and H4 20-period MA) and then at 61.8% Fibonacci level at 111.65. Resistance is initially at the recent swing high at 111.50, and then at 111.75 (R1 from the Daily time frame).
In the H1 chart, the pair crossed to low Bollinger Bands pattern on US data and it is currently traded at 111.09. Additionally, the 5-period EMA has crossed below 9-period EMA the last 2 hours, confirming further weakness for the pair.
Hence based on the intra-day weakness, an entry was taken at 111.12. Targets were set at 110.90 and 111.75 based on ATR. Support for this Short entry, was set at 111.25 (20-period MA) and at 111.35 (the recent high fractal). RSI has dipped from 67 to neutral and falling, with the Stochastics also turning negative down to 16 level, while MACD remains positive.
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